Vietnam Industry and Trade News Bulletin for AUGUST 04, 2023

A. POSITIVE ECONOMIC NEWS

1. Retail Sector Expansion

New Store Openings: Despite macroeconomic challenges affecting consumer confidence, the Vietnamese retail market remains active with businesses accelerating the opening of new stores to prepare for the year-end recovery.

2. Petroleum Management Legislation

Decree Amendments: The Ministry of Industry and Trade (MoIT) confirmed it submitted the draft amendments for Decree 95 and Decree 83 regarding petroleum business to the Government on July 18, 2023,.

B. GENERAL ECONOMIC AND INVESTMENT NEWS

1. State-Owned Enterprise (SOE) Restructuring

Handling Violations: Following a Government Inspectorate report, the Deputy Prime Minister has ordered strict handling of organizations and individuals involved in violations during the restructuring of SOEs under MoIT to prevent the loss of State assets.

2. Corporate Bond Market

Early Buybacks: Between the start of the year and July 28, businesses proactively bought back more than 135,000 billion VND of bonds before maturity (up 56.3% year-on-year) to restructure their capital.
Issuance Trends: Real estate companies accounted for the largest share of private bond issuances (54.2%), followed by credit institutions (31.6%).

3. Regional Development

Kien Giang Investment: The province is publicizing incentive policies and accelerating administrative reforms and digital transformation to attract non-budget investment projects for the 2021-2025 period.

C. ENERGY SECTOR

1. EVN’s Financial Status

Cash Flow Deficit: Vietnam Electricity (EVN) faces a severe financial situation with a projected cash flow shortage of 9,000 billion VND from July 2023, potentially reaching 22,000 billion VND by the end of the year.

2. Electricity Policy and Price Adjustments

Authority Shift: MoIT has proposed amending the Electricity Law to transfer the authority to adjust average retail electricity prices from the Prime Minister to the Government,.
Removing Cross-Subsidies: The proposed amendments aim to create a market-based pricing mechanism and eliminate cross-subsidies between different customer groups and regions.
Retail Competition: The goal is to separate power distribution (monopoly) from retail business (competitive) to implement a competitive retail electricity market by 2025.

3. Renewable Energy Challenges

Rooftop Solar Paradox: Experts point out a “closed” draft policy that only allows self-consumption and prohibits selling to neighbors, even within the same industrial park,. It is suggested that “self-use” should be redefined as “on-site consumption” to encourage investment.
Direct Power Purchase (DPPA): A draft mechanism for DPPA without going through EVN is being developed for renewable energy plants over 10 MW and large consumers.

4. Global Oil Market

Supply Cuts: Saudi Arabia will maintain its production cut of 1 million barrels per day through September 2023, while Russia plans to reduce exports by 300,000 barrels per day in the same month to stabilize global markets,.

D. IMPORT AND EXPORT NEWS

1. Rice Export Management

Strategic Conference: On August 4, MoIT chaired a major conference in Can Tho to manage rice exports following global market shocks.
Export Performance: In the first half of 2023, Vietnam exported 4.24 million tons of rice ($2.26 billion), with the average price rising 9% to $533/ton.
Potential and Security: Authorities estimate that Vietnam could potentially export between 7.5 and 9 million tons of rice in 2023 while still ensuring the highest level of national food security,.
Market Stabilization: MoIT has issued urgent directives to provinces and exporters to stabilize domestic rice prices and maintain minimum circulation reserves to prevent local price hikes,.

2. Other Commodities and Trade Balance

Tea Exports: In June 2023, tea exports fell significantly in both volume (down 21.1%) and value (down 24.1%) compared to the previous year.
Textile Anxiety: Textile firms report a shortage of orders for the third quarter and are pinning their hopes on a recovery in the final months of the year.
Trade Surplus: Vietnam achieved a record trade surplus of $15.23 billion in the first seven months of 2023, which supports macroeconomic stability but carries long-term concerns regarding declining import-export turnover.

E. COMPETITION, M&A, AND TRADE DEFENSE

1. Real Estate M&A Wave

Gamuda Land Expansion: The Malaysian developer acquired Tam Luc Real Estate for $315.8 million (approx. 7,500 billion VND), gaining control over high-potential projects in HCMC,.
Foreign Interest: Other major deals include Keppel Land’s $187 million stake in Khang Dien projects and ongoing negotiations between CapitaLand and Vinhomes for assets worth up to $1.5 billion.
Distressed Assets: Companies like Novaland and Phat Dat have also engaged in asset swaps or project sales to restructure debt,.

2. Trade Defense Measures

New Regulations: MoIT is seeking public opinion on a draft Circular to refine trade defense measures and exemption procedures.
Steel Technical Barriers: The Vietnam Steel Association is calling for “soft technical barriers” and quality control procedures on imported steel, particularly from China, to protect domestic production from unfair competition,.

Analogy: The current electricity pricing reform is like upgrading a decades-old irrigation system; by removing “cross-subsidies” (clogged pipes) and allowing “competitive retail” (multiple water sources), the government aims to ensure that the “water” (electricity) flows efficiently at a fair market price to those who need it most.